Misdemeanor Charges Drive FDA's Park Doctrine Enforcement

FDA will push harder for federal prosecutors to take misdemeanor cases as the agency ramps up use of the Park Doctrine and strict liability statutes to prosecute corporate executives and others.

While U.S. attorneys may give misdemeanor cases little consideration, expecting that the charges have a limited impact and a low likelihood of jail time, convictions are important to the drug industry.

At the Food and Drug Law Institute Enforcement and Litigation Conference in Washington, Eric Blumberg, deputy chief for litigation in FDA's Office of Chief Counsel, explained that bringing misdemeanor cases appears to be the agency's most effective strategy for curbing criminal conduct in the pharma industry.

"Unless the government shows more resolve to criminally charge individuals at all levels in the corporate structure, not just the CEO, with misdemeanor off-label violations, and when appropriate, with felonies, we cannot expect to make progress in deterring, either specifically or generally, off-label promotion," he said on the second day of the Oct. 12-13 conference.

The Park Doctrine allows the government to hold executives and others responsible for misdemeanor violations even if they had no prior knowledge of the conduct (¹ (Also see "FDA Targets Executives With Powerful Misdemeanor Strategy" - Pink Sheet, 26 Apr, 2010.)).

The doctrine allows the government to obtain misdemeanor convictions against individuals for violating the Food, Drug and Cosmetic Act. It also allows convictions even when an individual had no knowledge of a violation, and states that corporate officials can be held responsible because they have the power to prevent or correct violations.

For pharma executives, misdemeanor convictions carry heightened publicity, damage their reputations and could lead to debarment or exclusion from participation in federal health care programs.

The executive suite likely will not be the only place investigators look as future Park cases also investigate lower-level employees, food and drug attorneys say.

Sanctions Lack Power

Blumberg said government sanctions do not discourage companies' profit motive and are ineffective in preventing off-label marketing.

"In my view, to the extent the government is unable to capture all lost profits and impose additional meaningful deterrence, these settlements provide an inadequate deterrent," he said.

He suggested companies root out problematic conduct because they may already be under FDA's microscope.

"I don't know where, when or how many such cases will be brought ... but if you're a corporate executive or you're counsel advising that corporate executive, I would not wait for the first case to decide now's the time to comply with the law," he said.

"By the time the first case is publicized it will be too late for you to get a mulligan on your conduct."

Park Procedures Pending

Agency officials have yet to release procedures for Park prosecutions. Blumberg would not divulge when the procedures will be ready, saying they remain a work in progress.

He noted procedures for developing misdemeanor cases would be published in the FDA Regulatory Procedures Manual, the reference book agency employees use for enforcement and other matters.

Current agency procedures require criminal matters to go promptly to the Office of Criminal Investigations, Blumberg said. If OCI declines a case, FDA officials also could send it to the Office of Chief Counsel for potential referral to the Department of Justice.

At FDLI's 2010 annual conference in April, Blumberg advised that new standards for Park cases were imminent (² (Also see "Do Not Be Surprised By Corporate Responsibility Standards - FDA Warns" - Pink Sheet, 7 Jun, 2010.)).

No Checklist For Bringing Cases

The Park Doctrine and strict liability standard give the government significant leeway in gaining a conviction. Prosecutors do not have to prove individuals intended to break the law, knew of violations or engaged in negligent conduct under the strict liability standards in the FDC Act.

Based on Blumberg's comments, FDA likely will not standardize procedures for Park cases, but will consider each based on its facts. He said it would be "futile" to write a checklist of circumstances that would lead to a Park prosecution.

The agency also could revert to the usual questions it asks about a case's facts when deciding whether to bring Park charges. The questions include whether a firm's conduct results in actual or potential harm to the public, and whether the violation reflects a pattern of illegal behavior and/or failure to heed prior warnings.

Further, FDA ascertains how serious and widespread a violation is and whether it is egregious.

Start With Off-Label Cases

FDA appears likely to target flagrant off-label promotion in its first cases under new procedures for using the Park Doctrine and strict liability statutes to prosecute corporate executives and others.

FDA is not satisfied with prior off-label prosecutions and previous attempts to curb the conduct and appears ready to use Park to fight and deter blatant violations.

Blumberg said examples of flagrant off-label promotion include trying to sell a drug to practitioners who would not prescribe the drug even for an approved use, marketing a drug for a use even though the agency has declined to approve a supplement NDA, and training sales staff to deceive physicians.

Agency warnings about violations that could lead to a Park case are not required prior to charges being filed. Blumberg said a lack of prior warning is not a defense of the charges.

"Given the notoriety of the government's efforts to curtail off-label promotion, I would include flagrant off-label promotion as an example of the type of situation where executives should not expect a prior warning," he said.

Yet, Blumberg still gave a somewhat subtle hint in the speech. He said agency policy is to warn companies as an opportunity for self-correction, which saves resources on both sides and serves the public.

CEOs Can Protect Themselves

CEOs also will not be able to claim they were powerless to prevent or correct violations. Blumberg said recent corporate integrity agreements for off-label violations show a roadmap for shielding executives from the strict liability responsibility in the Park Doctrine.

The example he mentioned was the agreement Pfizer signed in 2009 as part of a $2.3 billion settlement of off-label marketing and physician kickback allegations involving several drugs (³ (Also see "Pfizer Says With "No Way Of Winning," Avoid Government Investigations" - Pink Sheet, 15 Mar, 2010.)).

Sales staff should be told in writing in their initial and renewed employment contracts they will be terminated and reported to FDA if caught promoting a drug for an off-label use.

Blumberg also said marketing and sales staff routinely should file reports with a corporate officer stating whether they engaged in off-label promotion or know of any such conduct by others. Falsifying the reports should be a fireable offense, he said.

Those caught promoting off-label uses should be required to forfeit all commissions related to off-label use. Blumberg suggested conducting background checks of new employees in sales and marketing positions and not hiring anyone who has been debarred.

[Editor's note: This article appears courtesy of "The Pink Sheet," Elsevier Business Intelligence's source for pharmaceutical and biotech industry news. ⁴ Register for a 30-day risk free trial.]

- Derrick Gingery ( ⁵ [email protected] )